With auto sales booming, it should be all smiles during dealer-factory meetings for most automakers and brands, but not for Cadillac. General Motors’ luxury brand is currently stuck in a seven month-long sales glut, and Cadillac boss Johan de Nysschen isn’t about to deliver them any news surrounding a short-term sales turnaround.
de Nysschen told Automotive News that he expects that “the dealers will not be happy” when they meet in San Francisco this week. He’s alluded to the fact that not all Cadillac dealers will be able to survive the road ahead. Notably, German rivals like BMW and Mercedes-Benz have less dealers, which makes it easier to maintain the certain level of customer service and overall quality that luxury buyers expect from a dealer when paying $60,000 or more for a car.
“Dealers want to believe in Johan,” Howard Drake, chairman of Cadillac’s National Dealer Council and owner of Casa de Cadillac in Sherman Oaks, California, told AN in an interview. “But this misery can’t be open-ended. Dealers need to understand what this sacrifice is for and know that it isn’t indefinite.”
Cadillac and de Nysschen recently lowered prices on the CTS amid dealer complaints the prices were too high, and announced plans to boost Escalade production to remedy tight supplies of the full-size SUV. Both of these moves should help keep dealers happy and help bolster sales, while a new advertising campaign, set to launch at the Oscars, should provide further support. Cadillac will also offer “competitive incentives”, with de Nysschen saying that the vehicles “won’t be the cheapest,” but “wont be the most expensive”, either.
Once Cadillac dealers sell down their 2014 inventory currently on hand, de Nysschen plans to stick to a 60-day supply of all Cadillacs, which is closer to the sales strategy employed by German brands BMW, Mercedes-Benz, and Audi. By comparison, Cadillac ran nearly double that all last year, which led to it having the highest incentives in the luxury market, less than ideal for a luxury brand that aims to convey exclusivity and status.
In addition to cutting supply to create more tension among production allocation, de Nysschen also plans to do away with the automaker’s dealer-incentive program, which incentives dealers for ordering more cars. Instead, de Nysschen will award dealers who have exceptional customer service and invest heavily in their facilities.